The UK economy stagnated but appears to have avoided a contraction in the first quarter of 2023. Nevertheless, the economy continues to face challenges of still elevated inflation and higher borrowing costs. Consumer price inflation will likely average 5.9% in 2023 and 1.7% in 2024. Moderate economic growth should return in 2024, with falling inflation and recovering export markets. Furthermore, the Bank of England will likely start cutting interest rates from March 2024. We expect subdued corporate investment during 2023 and 2024 in the wake of a struggling economy and higher corporation tax rate for many firms from April 2023, with risks tilting to the downside.
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